REDNews June 2013

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Table of Contents

Medical Office Grow in Favor Among Net Lease Investors...p.10

Will Co-Working Erode Demand for Office Space?...p.18

Running to Stand Still: The Office Sector...p.14

Central Texas Medical Boom...p.23

All My Exports Come From Texas...p.16 Medical Offices Grow in Favor Among Net Lease Investors - p.10 Highlights from the Texas Land Conference - p.12, 13 Running to Stand Still: The Office Sector - p.14, 15 All My Exports Come From Texas - p.16, 17 Will Co-Working Erode Demand For Office Space? - p.18, 19

Buzz...p.40 San Antonio Office/Industrial Outlook - p.24, 25 Dallas/Ft. Worth Office Outlook - p.29 Houston Metro Outlook - p.34 Houston Economy at a Glance - p.38 The Economic Impact of the Port of Houston - p.38 BUZZ - p.40

Central Texas Medical Boom - p.23

On the Cover:

Biltmore has 25 years of experience specializing in the design and construction of facilities for small business owners looking to purchase their own building or lease with an option to buy.
 Biltmore at Alamo Ranch in San Antonio will be for sale or lease with 2,500 to 10,000 SF.

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Central/South/West (Austin/San Antonio/Midland) Advertisers Index ...............................42 Announcements & Deals Done........20, 22 Auction..............................................23 Calendar of Events..............................20 Commercial Organization Contacts......20 Networking.......................................21 Office............................................9, 17 Office Medical.......................1, 5, 9, 17

North Texas (Dallas/Ft.Worth Metroplex) Advertisers Index ...............................42 Announcements & Deals Done............28 Calendar of Events .............................26 Commercial Organization Contacts .....26 Networking ......................................27

Southeast Texas (Metro Houston) Advertisers Index ...............................42 Announcements & Deals Done..30, 32, 41 Buzz.................................................40 Calendar of Events..............................30 Churches...........................................37 Commercial Organization Contacts......30 Hotel.................................................41 Industrial...............................................7 Networking........................................31 Office....................2, 3, 8, 9, 16, 33, 35 Office Medical............................2, 3, 31 Office Retail.......................................36 Office Service..............................7, 8, 9 Retail.................................................39 Vacant Land..........................9, 13, 37, 42

Commercial Services Environmental ....................................26 Lending ......................................42, 46

Texas Classifieds Texas Classifieds.................................42

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Dear Readers: Welcome to the June issue of REDNews!

I am excited to announce a new addition to our Editorial staff! Please join me in welcoming Karisa Connell as Assistant Editor. Karisa is a 16 year veteran of the commercial real estate industry and over the course of her career has worked with CBRE on a national corporate account and NAI Houston as Marketing Director. At REDNews, she will be responsible for sales for the magazine as well as developing informative content, attending CRE industry events and creating opportunities for the CRE community to contribute their unique insight on the market to our readers.

Be sure to keep an eye out for Karisa at events to ensure your name is on the list to be one of our featured CRE professionals! A little bit of free press never hurt anyone, right?

Lastly, we will be making other great changes to the magazine in the coming months. Stay tuned!

Best regards,

5909 West Loop South, Suite 135 Bellaire, Texas 77401 Houston. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713.661.6300 Outside Texas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800.836.2191 Fax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713.610.9015

Staff

Publisher Ginger Wheless. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ginger@rednews.com Editor Karisa Connell. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . karisa@rednews.com Marjorie Gohmert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . marjorie@rednews.com Contributing Writers Janis Arnold Ray Hankamer. . . . . . . . . . . . . . . . . . rhankamer@gmail.com Austin - Rosalie Keszler San Antonio - Suzanne Scott Graphics & Production Sr. Designer - Mark Ramos. . . . . . . . . . . . . . . . . . . . . . graphics@rednews.com Jr. Designer - Stephanie Bardwil E-Marketing Department Mark Lauber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . mark@rednews.com Accounting Benton Mahaffey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . accounting@rednews.com Database Marketing Manager Mark Lauber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . mark@rednews.com Sales Ginger Wheless. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ginger@rednews.com

Ginger Wheless

..............................................................................................

Digital Media Advisory Board Coy Davidson

Dear Readers:

Colliers International

Meagan Gallacher

Asset Plus Companies

Print & Digital Distribution Hello! I am very happy to join the REDNews team! My role involves some really dynamic initiatives to inform, educate and support our readers and I can’t wait to get started. I am looking forward to the opportunity to talk with each of you about how REDNews can help grow your business through branding, name recognition and interview opportunities.

We have made some content changes to our monthly focus for the remainder of the year. Check it out and contact me if you have a listing or service you’d like to feature in an industry specific issue. We will also be interviewing brokers for one-on-one interviews to discuss their particular market and specialty. It

REDNews is directly mailed each month to commercial real estate brokers, investors & developers in the following cities / areas as well as 200+ locations throughout Texas: Texas Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,650 Texas Leasing / Tenant Rep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,232 Texas Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,979 Texas Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,710 Outside Texas Investors, Brokers, Developers, etc. . . . . . . . . . . . . . . . . . . . . . . . . 81,577 Total REDNews Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,148

REDNews Has Gone Green Using Recycled Content To subscribe to REDNews call 713.661.6300 or log on to www.REDNews.com/free

should be a fun way to get to know Texas commercial real estate’s “up and comers” and catch up with seasoned veterans.

Watch your inbox for emails from me and pay attention to our surveys and polls. We will be giving away prizes and it should be worth your while! As a test to see if anyone is reading this, the first person to email me an answer to the following questions will win one, free email blast. “What is your favorite weekend getaway?” Email your answers to karisa@rednews.com.

Thank you for your support of REDNews!

Regards,

Monthly Focus for the remainder of the year.

July Multi-Family/Land August Retail September EDC - Texas October Office/Office-Medical

Karisa Connell

November Retail/Retail Land/EDCs December Office/Industrial

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Medical Offices Grow in Favor Among Net Lease Investors

by Mike Janssen

Converging trends have fostered growing attention on the medical sub-sector of net lease real estate, with demographics, federal legislation and technological advances all working in tandem.

The aging populace is expected to increasingly seek medical services, and the Affordable Care Act will expand insurance rolls, while improvements in medical services will also heighten demand.

Unlike other net lease tenants that are based on selling products, “you have an industry that deals with the human body and human nature, and that’s not going away any time soon,” says Ben Reinberg, CEO of the Alliance Consolidated Group of Cos. LLC in Bannockburn, Ill. “There’s a perception that this market is just going to continue to grow,” says Kevin Shields, CEO of Griffin Capital Corp. in El Segundo, Calif.

Medical tenants are viewed as stable due to the high cost of establishing offices and moving equipment. Some depend on their location near a hospital or other medical offices to reach a steady clientele. “When was the last time your doctor moved?” Griffin asks.

“They invest heavily in sites because they plan to be there a long time,” Reinberg says. “They don’t want to move—it’s expensive.”

Medical tenants also tend to have good credit and leases that provide for rent growth over the term of the lease. Some niches in medical sites are growing rapidly, such as dialysis clinics. Warren Buffett underscored the trend by investing heavily in DaVita, a dialysis company that recently made headlines by coming under scrutiny for Medicare fraud. Fresenius Medical Care has also been expanding.

These factors have heightened interest in medical net lease assets in recent months, executives say. Assets that sold two years ago at cap rates in the 8 percent to 10 percent range now trade at 7 percent, Reinberg says. Not only has publicity about medical net lease stoked interest, but as with the rest of the net lease market, cheap

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financing helped compress cap rates. Yet that could shift, given the fluidity of the market.

There are perceived risks among some medical sites. Buildings on hospital campuses or close to strong hospital operators furnish greater security. Buildings farther from hospital campuses may run a greater risk of vacancy.

Cap rates are higher in secondary and tertiary markets, representing the higher level of risk involved. “You don’t want to be caught with a specialized office that a tenant has vacated,” says Rick Greer, managing director of acquisition with Net Lease Capital Advisors. “It’s much harder to reposition than if you’re in a primary market, where you have the ability to re-lease it much quicker.”

Alliance Consolidated sticks with medical net lease deals in markets with a population of at least 50,000 within a fivemile radius, Reinberg says. A public company with a few years left on its lease in a small marketplace poses greater risk. Net Lease Capital Advisers prefers deals with properties close to hospital campuses, leased to tenants with credit of B- or better.

“Health care is going to be a growing field, and it’s something we’re going to continue to pursue and acquire,” Reinberg says.

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Highlights from the 23rd Annual Texas Land Conference

By Janis Arnold

April 25th & 26th, 2013 Omni San Antonio Hotel at the Colonnade Dr. Mark Dotzour, from Texas A&M’s Real Estate Center, on “The State of the Texas Real Estate Economy”. Dr. Dotzour was as humorous and entertaining as ever; however, given Dr. Dotzour’s reputation for doom and gloom this year, he was consistently and surprisingly upbeat and optimistic.

“I’m betting that the American people are much stronger than bad government. I’m bullish on the United States in the coming years; at the same time, I’m acknowledging that our government will continue to fail us. And by the way, if you’re watching any news station for over 7 or 8 minutes a day, you’re causing yourself serious emotional damage. The American people have ‘crisis fatigue’; they are tired of the constant state of ‘crisis’ that is generated by our leaders in Washington.”

Speaking to a crowd of more than 400 individuals, Dr. Dotzour said, “You’re right that I’m upbeat, because, guess what? If you’re selling Texas land, you’re selling the

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only asset that isn’t over valued right now. I mean, where else can people put their money? Last year, I recommended buying ammo. This year, I’m suggesting that it’s time to stock up on fireworks!”

Dr. Dotzour summarized the reasoning behind his positive outlook for the coming year as follows: • The economy began to rebound 3Q 2011 • Home sales, cars sales and retail sales rebounding • Real estate construction is growing again • Residential housing markets are stabilizing • More people are working • Five years of pent-up demand • Americans have credit capacity again For these reasons, Dr. Dotzour believes that Americans will ‘overwhelm poor government, which promises to be with us for a long time in the future.’

Deleveraging is nearly over as Americans have been paying off debt and are ready to start buying again. Americans have never before had a larger percentage of their income available to them, and mortgages are getting easier to come by.

In response to a question that he is frequently asked, “Should I sell my place now,

because I can get a ridiculously high price?” Dr. Dotzour responds, “Sell now, only if you have a better place to put your money. If you don’t, and that bothers you, then ‘your fear factor isn’t high enough to overcome your greed factor.’”

catalyst to watch for is when the feds begin to raise interest rates again. And remember, don’t pay attention to anyone other than the Chairman of the Federal Reserve.”

Dr. Dotzour says we don’t need to be worried about runaway inflation or that the U.S. dollar is going to collapse because, ‘the U.S. dollar is the best pig at the trough!’ The ‘two things that matter right now are: when will the feds let rates go up and how much will health care cost us?’

Regarding the cost of health care, the ‘wait and see’ mentality is what is keeping American businesses from moving forward, so the last half of this year will appear weaker, mainly due to slow hiring, but once the uncertainty of health care costs are resolved next January, Dr. Dotzour expects to see Americans, once again, begin to ‘overwhelm poor government’.

Other wisdom imparted by Dr. Dotzour: “We aren’t in a straight up economy. We can’t be when our government keeps hitting people in the face. But it seems to me that the current administration only has one volley left: the health care premium.

Premiums are going to go up about 40%, which is a huge tax on American workers.

Places like Regal cinemas are cutting back employees to 30 hours or less to avoid the health care costs. There are over 3.9 total job openings in the United States right now, but many employers aren’t hiring. They are ‘waiting to see’ what the hit will be on January 1. Small business net worth / profit is up, home prices could go up 6/7% and ‘the state bird of Texas is the Construction Crane.’ Everything except for land is overpriced, creating a ‘bubble’. No one knows when the ‘bubble’ will pop, but the

He believes that ‘Helicopter Ben’ will signal the Fed’s exit strategy’ way ahead of the game and we should watch for these indicators:

• They will stop buying new mortgages

• Stop buying more US Treasury debt

• Stop re-investing principal from mortgages held in their portfolio (runoff)

• Start selling mortgages held in portfolio

• Start selling Treasuries held in portfolio

• Raise the Fed Funds rate

• Raise the interest rate paid to banks for excess reserves

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Running to Stand Still: The Office Sector Sees Marginal Improvements ...but in Texas it’s better.

By: Brad D oremus an d Victor

Calanog

The national office vacancy rate declined by 10 basis points during the first quarter to 17 percent, marking exactly the same pace as the decline recorded in the prior quarter. If demand for office space was more robust, vacancies would be declining at a much faster pace since supply additions are virtually nil.

National vacancies remain 450 basis points above the sector’s cyclical low, recorded in the third quarter of 2007. None of these results offers a major surprise, given recent trends in job growth. Job creation improved from 2010 to 2012, rising from about 85,000 per month in 2010 to over 182,000 per month in 2012, but that is barely enough to sustain demand for office space.

There is a small group of superstars. San Francisco, New York, San Jose and a handful of Texas markets led the way this quarter in terms of increases in effective rents; this comes as no surprise given that tech- and energy-reliant markets have been outperforming the national average despite overall moribund trends in the office sector.

Construction Falls to Record Low Occupied stock rose by only 4.096 million square feet in the first quarter, also at roughly the same anemic pace as in the prior quarter. Given high vacancy rates and lenders who are still skittish about committing large amounts of money to construction financing, it is hard to justify breaking ground on new office projects. Only 1.697 million square feet of new office space came online in the first quarter of 2013, the lowest quarterly figure for new completions since Reis began publishing quarterly data in 1999.

Asking and effective rents both grew by 0.7 percent during the first quarter. While this represents a slight slowdown from the prior quarter’s growth rate of 0.8 percent for both asking and effective rents, it is well above the quarterly average of about 0.4 percent since rents began rising consistently in the fourth quarter of 2010. Despite 10 consecutive quarters of rent increases, rent levels are still anchored at benchmarks last observed in late 2007.

A Metro-Level Perspective Middling national numbers are driven by market-level figures that are split in half, with some metros recording improvements in occupancy (40 out of 82) and the rest showing declines.

There is a small group of superstars. San Francisco, New York, San Jose and a handful of Texas markets led the way this quarter in terms of increases in effective rents; this comes as no surprise given that tech- and energy-reliant markets have been outperforming the national average despite overall moribund trends in the office sector. The same markets are on top of the rankings for year-over-year changes for both asking and effective rent growth.

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The somewhat decent quarterly rent hikes the past two quarters were driven mostly by the performance of this handful of top markets. For example, the year-over-year effective rent growths at the metro level range from a high of 7.3 percent in San Francisco to a low of -0.3 percent in Fort Lauderdale, Fla. However, as you can see in the chart below, there is a significant difference between the handful of markets at the upper end of the range and everything else. From the low of -0.3 percent until roughly 1.9 percent, the metro rent growths show a steady progression. But the rent growth figures for the top five markets (highlighted in orange) are much higher than even the metro ranked sixth by rent growth (Austin). Without the strength of the top five markets, the national year-over-year effective rent growth would be cut in half.

The outlook for the tightest market in the country, however, is not as bright as for the markets identified in the chart. Washington, DC remains the tightest market in terms of vacancy rates, coming in at 9.5 percent for the first quarter of 2013. However, it is likely that Washington and neighboring markets will have to contend with depressed demand in the near term, as sequestration proceedings hit government and related businesses in the area. Washington’s vacancy rate rose by 20 basis points this quarter (suburban Virginia/Northern Virginia’s vacancy also rose by 20 basis points, to 15.9 percent). Suburban Maryland’s vacancy rate remained flat, at 14.9 percent.

Effective rent growth is still positive for the quarter, but falls somewhere in the middle to lower half of national rankings (Washington, at 0.5 percent, is at number 25 out of 82; suburban Virginia, at 0.4 percent, is at number 31. Suburban Maryland barely eked out a gain at 0.1 percent and is at number 67).

The Near-Term Outlook: Jobs, Jobs, Jobs While different metros will experience their own ups and downs, broad-based job growth will still be the key to seeing a nation-wide recovery in office space fundamentals. On the bright side, the latest job report offered a glimmer of hope for the labor market. April’s job figures came in above expectations at roughly165,000. While this isn’t exactly break neck pace, the revisions to the prior month helped buoy spirits. March’s very weak payroll additions were revised up by 50,000, while February’s total was revised up to a strong 332,000. Moreover, gains in business/ professional services were the primary driver of April’s job gains, which is a plus for office building owners.

Still, a marked acceleration in job gains is unlikely. Reis expects a slight improvement in payroll gains for 2013, averaging 190,000 per month, with much of the stronger hiring coming in the latter half of the year. We may see an increase in office leasing activity later in the year, but the pace of vacancy declines and improvements in occupied stock and rent levels is likely to remain unimpressive.

Brad Doremus is senior analyst,and Victor Calanog is head of research and economics, for New York-based research firm Reis.

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All My Exports Come From Texas

By: Luis Torres

Excerpts from: Tierra Grande magazine, April 2013

Texas exports more goods than any other U.S. state (Figure 1). Almost two of ten manufactured goods are exported from Texas to world markets. Some of these goods are manufactured in the state. Others are produced out of state and shipped to Texas for consolidation in distribution centers and export. Though these goods are not produced in Texas, they have positive spillover effects for the state’s economy in areas such as transportation and warehousing services, which generate income and jobs for the regional economy.

How Much Does Texas Export?

In 2012, Texas exports totaled $265 billion and manufacturing exports $251 bil-

lion. In 2011, they represented 19.2 percent and 12.8 percent, respectively, of the state’s gross state product. From 1990 to 2012, Texas exports have increased 7.9 percent on average annually.

Manufacturing exports increased 8.1 percent during the period, an impressive figure considering it includes the 2001 economic recession and the Great Recession of 2008–09. Texas exports were almost 1 percent of world manufacturing exports and ranked in the top 55 versus other countries’ exports in 2009. Texas has more manufacturing exports than Peru, Chile and Norway.

Where Do Texas Exports Go? Texas sends manufactured goods to 222 countries. Mexico is Texas’ largest trading partner (Figure 2). Approximately onethird (36 percent) of all manufacturing exports originated in Texas were exported to Mexico in 2012; Canada was a distant second at 9 percent. In recent years, exports to Mexico and Canada have fallen while those to Brazil, the Netherlands and China have increased. Manufacturing exports to Brazil and the Netherlands doubled, while exports to China tripled from 1999 to 2012. This trend has diversified Texas’ export business. The increase in exports to Brazil and China has been a direct result of their recent economic growth, which has increased demand for goods such as chemical and petroleum products.

When comparing Texas export markets with those of the United States, the pattern is slightly different. Canada was the biggest export destination with 19.4 percent of U.S. manufactured exports in 2012; Mexico was second with 14.5 percent.

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Texas Exports Outperform the Nation Texas’ 2000–12 manufactured exports grew by 7.2 percent compared with 3.8 percent for U.S. exports. A shift-share analysis of 2002–12 reveals that four factors impact Texas export growth: (1) national share, (2) industry mix, (3) competitive effect and (4) destination effect.

The net results when considering only regional factors indicate that Texas’ industry mix was concentrated in industries showing greater growth relative to the entire country. The positive competitive effect signals that local economic factors in Texas caused the state’s industries to grow faster than the nation’s.

Finally, the destination effect shows that Texas exports were concentrated in high-growth foreign markets.

Metro Area, Custom Port Export Growth The Houston-Sugar Land-Baytown region, a global behemoth in the petroleum industry, achieved an impressive export performance from 2005 to 2011. Its agglomeration of petroleum companies allowed exports to grow at an annual rate of 13.1 percent from 2006 to 2011, or 52.3 percent of the state’s exports (Table 1). This is five times more than second-place Dallas-Fort Worth-Arlington, which

had 13.3 percent of the state’s exports (Figure 4 and Table 1). The state’s other two major metropolitan areas, San Antonio and Austin, had 5.3 percent and 4.3 percent of Texas exports, respectively (Table 1). San Antonio’s export growth outpaced the other major Texas metropolitan areas (Figure 4).

Texas’ other major exporting areas are border and port areas, including El Paso, the third-highest exporting MSA in the state (Table 1). Between them, these areas represent 19.4 percent of the state’s export movements. These are not manufacturing regions but custom ports where many exports leave the country. They are among the nation’s major exporting regions. Brownsville-Harlingen merchandise exports have grown at a greater rate than the other border MSAs (Figure 5).

THE TAKEAWAY Texas’ border location, sea access, natural oil and gas resources, along with favorable labor costs and a friendly business climate have made it the top exporting state in the country and a major world exporter.

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Will Co-Working Erode Demand for Office Space?

By: Beth Mattson-Teig with National Real Estate Investor

Co-working—the latest trend in workplace strategies—could be the catalyst that shakes up the staid office market.

The tradition of “one worker, one desk” may soon be a thing of the past. Companies across industries are eliminating offices, private work stations and cubicles in favor of team-oriented and shared workspaces.

“I think there is going to be a dramatic shift in how we use space,” says Chris Zlocki, managing director of strategy and innovation for corporate solutions at Colliers International in Denver.

Despite employees’ ability to work from anywhere, companies, especially knowledge-based companies, are refocusing on the importance of collaboration to foster ideas and innovation. Yahoo brought the issue front and center when it announced earlier this year that it would call its remote workers back to its company offices. Other tech companies, such as Google and Apple, have thrived on the mantra that “innovation doesn’t happen in isolation,” says Richard Kadzis, a vice president at CoreNet Global, an Atlanta-based association for corporate real estate professionals.

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er, and if so, how it will impact office tenants’ real estate decisions. Industry data shows that the physical footprint for office workers is shrinking. The amount of dedicated space per office worker has dropped from about 225 sq. ft. in 2010 to 176 sq. ft. in 2012, according to CoreNet Global.

“We have seen a trend toward what companies call a smaller, but smarter workplace,” says Kadzis.

In addition, a 2012 CoreNet Global survey of corporate real estate executives shows that companies are continuing to push for greater space efficiency. Overall, 40 percent of survey respondents said they expect the amount of dedicated space per office worker to be 100 sq. ft. or less in five years, while 29 percent expect the amount of space per worker to be less than 150 sq. ft.

Morphing office space The shrinking office footprint supports two key trends. First, companies are striving to use real estate more efficiently to get an immediate bottom line impact.

Second, it also reflects the shift in how companies are utilizing space differently to accommodate changing work patterns.

Businesses across industries are opting for office space that allows for greater interaction among workers. For example, management consulting firm Accenture completely revamped its offices in Minneapolis last year, replacing cubicles with a flexible floor plan that includes shared workspaces. It also increased its number of meeting rooms and added a café, all to increase collaboration among its employees. In the process, the firm downsized its Minneapolis office from about 70,000 sq. ft. to 41,000 sq. ft.

Certainly, companies have been testing alternative workplace strategies for years. Concepts such as hoteling, hot desks and home-based workers have been used for more than two decades. Yet to date, those trends have hardly revolutionized the office industry. What is different now is that advances in technology with mobile devices and cloud computing are enabling more flexibility in how and where people work. People no longer need to be tethered to their desks, notes Zlocki.

Such examples raise questions as to whether this new trend has staying pow-

Shifting demographics also are accelerating change as companies work to ac-

/ June 2013

commodate a younger generation of workers. Gen Y, or the new Millennials as this group of teens, 20- and 30-somethings is often called, is a more tech-savvy, socially-centered workforce that has grown up with the concept of using technology to solve problems. Gen Y is not just driving the co-working trend, but they are also fueling a shift to a distributed work day. Unlike the traditional nine-to-five worker, younger professionals are distributing their work over the whole day, from perhaps 7 a.m. to 10 p.m. and more of that work is being done outside the office. The more flexible work schedule and telecommuting means that the number of people in an office varies more than if everyone was on the same schedule. This facilitates the sharing of space. Those trends are all influencing the continued evolution in the way people work, and ultimately the shift in demand for the type and amount of work space companies require, Zlocki adds. Those changes are creating a “triple bottom line effect,” where companies have the opportunity to use their real estate more efficiently, as well as improving the work culture and the work environment, he adds.

Staying connected Co-working is creating demand for alternative workplaces-both in corporate settings and at third-party facilities. For example, workers can use apps such as Liquid Space to find a drop-in location. “You might not be working with anyone from your company, but you will be with like-minded people who also want to be with other people and talk about what they’re doing,” says Kadzis.

workers at collaborative business centers such as Mission 50 Workspaces in Hoboken, N.J. Founder Gregg Dell’Aquila launched the collaborative business center about 15 months ago as a pilot program. The 3,000-sq.ft. center offers a mix of open work stations and common area space along with private “phone booths.” Mission 50 currently has some 160 members who check in at different times to use the shared workspaces. The project has been so successful that Mission 50 is looking for additional space to open one or two new locations this year.

“We have seen a trend toward what companies call a smaller, but smarter workplace”

In addition, co-working is impacting how office space is configured. For example, individual workstations might have room for a bump-out where workers can have space for a one-on-one meeting, or the configuration might shift with four desks set up with a two-top or a four-top meeting space. Between different work groups, there is more focus on creating break-out spaces or cafés, or more informal areas that can be used as meeting spaces. In addition, companies are adding more conference rooms of varying sizes, ranging from large team rooms to “huddle rooms” that can accommodate smaller groups to allow more meetings to take place within an office. “Collaborative work environments are where the work spaces of today and tomorrow are headed, but with a cautionary note,” says Kadzis.

Companies still need to strike a balance and not build too much collaborative space. It is still important to have dedicated space where people can have privacy to make phone calls or be able to concentrate on “heads-down” tasks without the distraction of other workers, he adds.

Small businesses and entrepreneurs are finding ways to connect with other

19

CENTRAL / SOUTH TEXAS

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June 2013

Organizational Contacts Austin

Wednesday 6/5 11:30 AM - 1:00 PM (Austin) CCIM Networking Luncheon Thursday 6/6 7:30 AM - 9:00 AM (Austin) CTCAR Property Info Exchange Tuesday 6/11 9:00 AM - 4:00 PM (Austin) CTCAR - MCE Course: ”Policy & Procedures Manual for the Commercial Brokerage Companies” Tuesday 6/11 11:30 AM - 1:00 PM (Austin) IREM Austin: TOUR of the Federal Courthouse Tuesday 6/11 11:30 AM - 1:00 PM (San Antonio) CREW San Antonio Monthly Luncheon Thursday 6/13 11:30 AM - 1:00 PM (San Antonio) IREM San Antonio - Monthly Luncheon Tuesday 6/18 11:30 AM - 1:00 PM (Austin) CREW Monthly Luncheon Wednesday 6/19 11:30 AM - 1:00 PM (Austin) NAHREP Luncheon Wednesday 6/26 11:30 AM - 1:00 PM (San Antonio) BOMA Membership Luncheon

AMBA. . . . . . . . . . . . . . . . . . . . . . . . . . www.austinmba.org BOMA. . . . . . . . . . . . . . . . . . . . . . . www.bomaaustin.org CCIM. . . . . . . . . . . . . . . . . . . . . . . . . . www.ccimtexas.com CLBA. . . . . . . . . . . . . . . . . . . . . . . . . . www.clbaonline.com CRE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.cre.org CREW. . . . . . . . . . . . . . . . . . . . . . . . www.crewaustin.com CTCAR. . . . . . . . . . . . . . . . . . . . . . . www.ctcaronline.com IREM. . . . . . . . . . . . . . . . . . . . . . . . . . . . www.iremaustin.org NAHREP. . . . . . . . . . . . . . . . . . . www.nahrepaustin.org RECA. . . . . . . . . . . . . . . . . . . . . . . . . www.recaonline.com SIOR (South Texas Chapter). . . . . .www.sior.com ULI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.austin.uli.org WCR. . . . . . . . . . . . . . . . . . . . . . . . . . . . www.austinwcr.org

San Antonio CCIM. . . . . . . . . . . . . . chapters.ccim.com/ sanantoniosouthtexas CREW. . . . . . . . . . . . . . . . . www.crew-sanantonio.org IREM. . . . . . . . . . . . . . . . . . . . . www.iremsanantonio.org IREP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.irepsa.com RECSA. . . . . . . . . . . . . . . . . . . www.recsanantonio.com SABOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.sabor.com GSABA. . . . . . . . . . . . . . . . . . . . . . . www.sabuilders.com SIOR (South Texas Chapter).. . . . . www.sior.com WCR. . . . . . . . . . . . . . . . . . . . . www.wcrsanantonio.org For more information on CALENDAR OF EVENTS log on to

Email your events to: Mark@REDNews.com Event dates are based on each organization’s typical monthly schedule which is subject to change. Please verify each event with the related organization.

You can get daily recaps of CRE News from 40+ different sources at www.REDNews.com 20 /

/ June 2013

NETWORKING CCIM Central Texas | April Luncheon | April 18

(L to R) Scott Kennedy of CCIM, Eduardo Reash of First Citizens Bank, Holden Stark of First Citizens Bank and Krystal Loyd of Gear Consulting.

CREW Austin | Annual Spring Event “Cinco de Mayo Celebration” | May 6

(L to R) Jesse Maniccia of D2K Properties, Inc., and Sandra Kimball of Incenergy.

CENTRAL / SOUTH TEXAS

(L to R) Jim Young of KW Commercial, Wendel Pardue of Wells Fargo, Shelly Rosales of Forestar, Lise Wineland, CCIM of Marketplace Real Estate and Cross Moceri of Presdium Group.

(L to R) Kimberly Nordhoff, Jeff Needles and Katie Farkash of Sixthriver Architects.

CTCAR | Power Cruz | April 17

(L to R) Eric Layne, CCIM of Layne Co & Paul Ott of the Paul Ott Company

(L to R) Amy Ables of CTCAR, Rose Cabezut of KW Commercial, Teresa Person of 1031 Exchange & Stephanie Pierce of Spencer Architects

21

CENTRAL / SOUTH TEXAS

ANNOUNCEMENTS & DEALS DONE

Ted Doucet

ANNOUNCEMENT - Austin - Oxford Commercial is proud to announce that they have promoted Ted Doucet to Senior Vice President. Along with Doucet’s many accomplishments as a commercial real estate broker, he was recently awarded as Oxford Commercial’s 2012 Top Producer.

Doucet primarily focuses on tenant services, and helps clients locate and negotiate for the lease or purchase of office space. In 2012, Ted completed 28 transactions totaling over 256,205 rentable square feet serving clients like SailPoint, New York Life – Long Term Health and Quality Systems Inc.

OFFICE Austin - Stream Realty Partners, a Dallas, TXbased commercial real estate investor and developer, acquired a portfolio that includes the 23-story Bank of America tower in Austin. The price was undisclosed. The 256,911 SF office building was delivered in 1975 at 515 Congress Ave. in the central business district. The sale also included 120 E. Fifth St., 119 E. Sixth St., 501 Brazos St., 508 Brazos St., 501 Congress Ave. and 500 San Jacinto Blvd., all in Austin. Andrew Levy and Todd Savage of HFF represented the seller, T. Stacy & Associates, in the transaction.

HOSPITALITY

Giddings - A private investor has purchased the Ramada, a 79 room Hotel located at 4002 East Austin Street in Giddings, TX. The asset commanded a list price of $1,950,000. Michael Yu and Rahul Bijlani, Senior Directors of the National Hospitality Group and Dennis Drake, an investment specialist in Marcus & Millichap’s Houston office, had the exclusive listing to market the property on behalf of the seller, a private investor. The buyer, a private investor, was also secured and represented by Bijlani, Yu and Tyler Bean, an investment specialist in Marcus & Millichap’s Fort Worth office.

INDUSTRIAL Austin - GH TechRidge Five has purchased TechRidge Five. The property consists of 226,076 SF of light industrial space at 905 W. Howard Lane in Austin. Education and publishing company NCS Pearson renewed its five-year lease for 100 percent of the building. Matthew Paddock, a managing director with Metzler Real Estate, the seller, managed the sale. CBRE’s Jack Fraker and Josh McArtor were the listing brokers.

Pharr - AMERCO Real Estate Company has purchased AAA Storage EXP 281 located at 4007 Cage Blvd. Pharr, Texas for an undisclosed amount. This 94,160 SF storage facility consists of 622 climate control, non-climate control selfstorage and parking units. Joe Linsalata of Linsalata Realty Services represented the seller in the transaction. The buyer’s representative was not disclosed.

San Antonio - Wheel Pros has leased 20,550 SF at City Park East Distribution Center, Bldg A, in San Antonio. The facility is located at 8555 Northeast Loop 410. Jason Schnittger of Stream Realty Partners represented the tenant in the transaction and Rob Burlingame of CB Richard Ellis represented the undisclosed landlord.

MULTI-FAMILY Austin - A California-based investor has purchased Austin Commons, a 240-unit apartment complex in north central Austin. The property is located at 1630 Rutland Drive near Texas State Highway Loop 1 and the U.S. Highway 183/ Interstate 35 interchange. The terms of the sale were not disclosed. Joe James and Kent Myers,

22 /

senior associates in Marcus & Millichap’s Austin office, represented the seller, an investment group led by Hollywood Kingsley LLC II, in the transaction. The buyer’s representative was not disclosed.

/ June 2013

San Antonio - Visionary Properties, Inc. has renewed and expanded its lease in IBC Centre, a Class A, multi-tenant office building located at 175 E. Houston in downtown San Antonio, Texas. Visionary Properties increased the size of its headquarters at the 13-story building by 42 percent, adding 47,013 SF to its existing space for a total of 159,665 SF. Steve Zimmerman of The Retail Connection represented the tenant in the transaction. Larry Mendez, senior vice president and Scott Wolff, associate vice president, both of Transwestern, represented the building owner.

Austin - Cielo Realty Partners has purchased three historic buildings on Congress Avenue in downtown Austin. The buildings are located at 315, 319 and 323 Congress Ave. The buildings — which are known as the Swift Building, the Day Building and the McKean-Eilers Building — all date back to the late 1800s and encompass about 46,000 SF. The purchase price was not disclosed. Cielo represented itself in the transaction. Michele Gary with The Weitzman Group represented the seller, an Austin-based limited partnership.

RETAIL Austin - Factory Mattress Sales has leased a 20,065 SF building in the Southpark Corporate Center 3, located at 4209 South Industrial Drive in Austin. The building will be the new distribution center for the retailer, which has 16 locations serving Austin and San Antonio. David Schnitzer of Dallas-based Venture Commercial represented the tenant in lease negotiations. TIG Real Estate Services represented the landlord.

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CENTRAL / SOUTH TEXAS

Central Texas Medical Boom by: Suzanne Scott

...........................................................................................

Located between Austin and San Antonio on the booming I-35 corridor, New Braunfels population has increased over 55% in the past eight years. This growth and the increased patient load created by Obamacare are fueling a medical property development boom that includes new hospitals and medical facilities as well as senior living facility expansion and new development.

The existing Eden Hill Community senior living center, originally built in 1910 is going through a $72 million renovation and expansion that includes new construction of The Pinnacle at Eden Hill, a 103 unit independent living apartment building. The CCRC (Continuous Care Retirement Center) model in place at Eden Hill allows seniors to stay within the Eden Hill community as their care and medical needs advance.

According to Eden Hill management, about 50% of new residents move to New Braunfels from outside the area.

The Christus Santa Rosa system opened a ten bed 12,000 foot free standing emergency room in January at the FM 306 and IH-35 Creekside development, directly behind Buccee’s, the largest convenience store in the world at 67,000

square feet. Patients needing further care will be transferred to the existing Christus Santa Rosa downtown hospital and eventually to their planned Medical Campus on up to 50 acres at the master planned Veramendi site on Loop 337.

Also on a 56 acre site adjacent to The Town Center at Creekside, Resolute Health, a division of Vanguard has construction well under way on a 150 bed hospital system that will also include a 25,000 foot wellness facility open to the community. They are developing an integrative model of health care based on wellness and prevention and opening is anticipated in the spring of 2014.

The hospital joins the approximately million square feet of retail and restaurant space and a 400 unit apartment complex set to house new residents soon.

Houston based NewQuest properties, owner of the Town Center at Creekside in New Braunfels, will utilize a good portion of the remaining 80 acres of undeveloped land they own to enter into the medical arena. Negotiations are under way for a skilled nursing facility and plans are in the works for medical office space to be developed adjacent to the hospital. With lots of green space, hike and bike trails and the ability to shop, live, work and even receive medical care, Town Center at Creekside developed fully will be truly a livable community.

Because of the growth of the I-35 corridor, the existing and planned medical facilities are positioning New Braunfels to be a regional powerhouse that will continue to provide more and more medical services as the population grows and ages.

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CENTRAL / SOUTH TEXAS

San Antonio Office Report First Quarter 2013

By: Kim Gatley, Sr. Vice President & Director of Research NAI REOC San Antonio

The San Antonio office market is off to an optimistic start for 2013. Buoyed by a robust health care industry and an emerging energy sector, leasing velocity appears to be on the rise. New leases and expansions inked in the first quarter generated 120,762 sq. ft. of positive net absorption led by the Northwest sector.

Specific gains were noted in several Northwest Class A office buildings including the relocation of Dahill Industries out of an industrial building in the Far West sector into 32,271 sq. ft. at Fountainhead Tower, Regus Executive Suites (14,873 sf) at ĂŠilan 2 and Propel Financial Svcs. (14,165 sf) at The Forum. Although the CBD submarket remains challenged with a vacancy rate of nearly 30%, positive leasing activity throughout the market allowed the citywide vacancy rate to improve to 19.8%. Demand for toptier space tightened the citywide Class A vacancy rate to 12.8%. More confident with the direction of the market, many landlords are beginning to reign in concessions and test higher rental rates.

The perceived need for additional quality office space has the market sitting on the cusp of a new development cycle. In addition to The Oaks at University Business Park 2 (101,630 sf) - scheduled to come online in the Northwest sector later this summer anchored by Univision (41,000 sf) - two new buildings broke ground this quarter in the Far North sector.

Pulte Homes inked a lease for 15,000 square feet to kick off construction at Ridgewood Business Center (65,000 sf) - the first of three value-added office buildings that will ultimately span 256,000 sq. ft. on 6.5 acres in the Ridgewood Park located at Dry Creek Way and Ridgewood Pkwy. adjacent to the Tesoro HQ. Shavano Center IV (43,500 sf) is located at 3602 Paesanos Parkway. A steady economy and improving fundamentals have developers in the hunt for pre-leasing activity that will help them kick off newly proposed projects such as WestRidge at La Cantera (128,700 sf), Monterrey Office Park (120,000 sf) and 13582 IH-10 West (104,500 sf).

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/ June 2013

First Quarter 2013

By: Kim Gatley, Sr. Vice President & Director of Research NAI REOC San Antonio

The San Antonio industrial market demonstrated another strong performance in the first quarter of 2013. New leases and expansions generated 318,855 square feet of positive net absorption which tightened the citywide vacancy rate to 9.1% and supported slight increases in asking rental rates.

Healthy gains were recorded in both the Service Center/Flex and Distribution Warehouse markets. Growing out of space at their 5-million-squarefoot campus, USAA – San Antonio’s largest private sector employer - took down 128,354 square feet of Flex space at the nearby University Park Tech Center III & IV which will accommodate the recently announced intended addition of 1,000 employees.

CENTRAL / SOUTH TEXAS

San Antonio Industrial Report

In order to keep up with continued demand, the local market appears poised for the next development cycle. Two projects are currently underway including Building 3 (66,170 sf) at the Thousand Oaks Business Center in the North Central sector and the Amazon.com Fulfillment Center (1.2 msf) in Verde Enterprise Business Park situated in the Northeast sector.

Additionally, two significant owner-occupied projects are nearing completion including Glazer’s Distribution (518,000 sf) and Maruchan (500,000 sf) – both located on the city’s southwest side.

The Energy sector continues to be a major economic driver behind much of the growth and activity in the local industrial market including a new manufacturing plant. Nexolon America, producer of high-efficiency solar panels, recently broke ground on their new headquarters/manufacturing plant (240,000 sf) at Brooks City-Base on the city’s southeast side.

25

NORTH TEXAS

June 2013

Organizational Contacts Dallas | Fort Worth

Monday 6/3 11:00 AM - 6:00 PM (Dallas) NTCAR: Commercial Broker Classic Tuesday 6/4 11:30 AM - 1:00 PM (Fort Worth) BOMA Fort Worth Monthly Luncheon Thursday 6/6 12:00 PM - 6:30 PM (Dallas) REFEA: Annual REFEA Golf Day Thursday 6/6 5:30 PM - 7:00 PM (Dallas) North Texas CCIM: Happy Hour Wednesday 6/12 11:45 AM - 1:30 PM (Forth Worth) CREW Fort Worth: JPS Presentation and Tour Thursday 6/13 8:30 AM - 6:30 PM (Dallas) NTCAR: Commercial Leasing Analysis, Comparison and Lease vs. Own

BOMA Dallas. . . . . . . . . . . . . . www.bomadallas.org BOMA Ft. Worth. . . . . www.bomafortworth.org CCIM. . . . . . . . . . . . . . . . . . . . . . . . . . . www.NTCCIM.com CREW Dallas. . . . . . . . . . . . . . www.crew-dallas.org CREW Fort Worth. . . . . . . . . . . . . . www.fwcrew.org IREM Dallas. . . . . . . . . . . . . . . . . www.irem-dallas.org NAIOP. . . . . . . . . . . . . . . . www.northtexasnaiop.com NTCAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.ntcar.org REFEA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.refea.org SCR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.scr-fw.org SIOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.sior.com TREC. . . . . . . . . . . . . . . . . . . . . . . . . . . . www.recouncil.com ULI. . . . . . . . . . . . . . . . . . . . . . . . . . www.northtexas.uli.org For more information on CALENDAR OF EVENTS log on to

Email your events to: Mark@REDNews.com Event dates are based on each organization’s typical monthly schedule which is subject to change. Please verify each event with the related organization.

Thursday 6/20 11:30 AM - 1:00 PM (Dallas) North Texas CCIM: June Luncheon Thursday 6/27 7:00 PM - 10:00 PM (Dallas) NTCAR: YPF 2nd Quarter Event

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/ June 2013

NETWORKING CREW Dallas | 27th annual CREW Dallas Golf Classic tournament | April 15

(L to R) Donald L. Braun, president; Laurie D. Biddle, general counsel and vice president; Brad Gibson, leasing associate all with Hall Financial are at the site of the “Helicopter Golf Ball Drop�

Winner of the ball drop at the event was Nick Muros with Marvin F. Poer Company.

NORTH TEXAS

(L to R) Butler Burgher Team - Chase Addington, Chris Roach, Diane Butler and Justin Teel won First Place for low net.

REM Dallas | Perot Museum Networking Event | April 25

IREM Dallas President Claudia Ferrara, right, CPM, LEED AP addressing the crowd.

Two attendees of the Perot Museum Networking Event

Attendees of the Perot Museum Networking Event

Attendees of the Perot Museum Networking Event

27

NORTH TEXAS

ANNOUNCEMENTS & DEALS DONE

Gregory L. Miller

Peery Wood

ANNOUNCEMENT - Dallas - The Henry S. Miller family of companies and their Chair, Mrs. Vance C. Miller (known as “Tincy”) are proud to announce their new Chief Executive Officer and President of Henry S. Miller Cos., Mr. Gregory L. Miller. This announcement follows the untimely passing of Greg’s father and former CEO, Mr. Vance C. Miller. The Miller company was founded on and continues to operate by providing the best in commercial real estate service and integrity. “I am so very proud, as would Vance have been, to announce Greg as the new CEO and President of Henry S. Miller Cos,” said Mrs. Miller.

ANNOUNCEMENT - Dallas - The Dallas office of CBRE announces that Peery Wood has joined as a senior vice president in the office tenant representation group. Peery joins CBRE with more than 20 years of commercial real estate experience. Most recently, he was a senior vice president with Lincoln Property Company in Dallas where he established the Tenant Representation Group in 2003. Prior to joining Lincoln Property Company, he also worked at Studley and Cushman & Wakefield of Texas. His real estate career began in 1989 at The Robert C. Wilson Co. in Houston.

INDUSTRIAL Garland - A commercial copier refurbishing business has purchased 1111 South Shiloh Road in Garland, Texas. The facility is a 235, 000 SF industrial building sitting on approximately 12 acres on South Shiloh Road between Miller Road and Forest Lane. Henry S. Miller Brokerage’s Office-Industrial Division President, Greg Trout and Senior Vice President, Jerry Averyt handled all the marketing and sale negotiations for the property’s owner, Grand Six, LLC. The buyer was represented by Jack Godhwani of Beam Real Estate.

Fort Worth - A Texas private equity group has purchased a 174,905 SF building located at 645-701 N Hampton Road, Fort Worth, Texas.

Becky Thompson of Lee & Associates represented the seller, Radio Shack, in the transaction.

Brian Flaherty of Lee & Associates represented the buyer.

Garland - An investor has purchased a 336,499-square foot manufacturing and distribution facility net-leased to the Apex Tool Group in Garland, Texas. The facility is located at 3000 West Kingsley Road in Garland. The final selling price was $10,700,000. John Glass in Marcus & Millichap’s San Francisco office, and James Bell in the firm’s Houston office, represented the seller in the transaction.

Glass and Scott Pertel, an associate in San Francisco, represented the buyer.

Carrollton - Eway Auto Group, LLC has leased 19,389 SF of industrial space at 1213 Trend Drive, Carrollton, Texas. Nathan Denton represented the tenant in the transaction. The landlord, MP Acquiport Industrial, LLC, was represented by Jerod Hangartner of TIG Real Estate Services.

28 /

/ June 2013

Dallas - Fleetgistics has leased 21,300 SF of industrial space in Cornerstone Crossing, 9761 Clifford Dr., Dallas, from H20 Warehouse LP. Stephen A. Scott, senior vice president of Bradford Commercial Real Estate Services, represented the tenant. Matt Waldon of Pillar Commercial represented the landlord.

OFFICE Fort Worth - Shannon, Gracey, Ratliff & Miller LLP has leased 36,269 SF on the top three stories of Sundance Square - The Commerce Building at 420 Commerce St. in Fort Worth.

Construction on the Class A, five-story office building started last May and is scheduled for completion by October of this year. Shannon, Gracey’s new deal marks the first office lease signed for the property. Jack Huff and Kyle Poulson of Transwestern represented the tenant, while the landlord, Sundance Square Management, was represented in-house by Bill Booker and Robert Gamblin.

Irving - JP Realty Partners, Ltd. has purchased z Center I & II, a 302,459-square-foot, Class A office complex in Irving, Texas for an undisclosed amount. MacArthur Center I & II is located at the intersection of State Highway 114 and MacArthur Boulevard in the Las Colinas submarket. HFF represented both the buyer and the seller, a specialty finance company, in the transaction. . HFF also represented the purchaser in arranging acquisition financing with Capital One Bank.

Dallas - Regions Bank has leased 70,970 SF at 17Seventeen McKinney in Uptown Dallas.

17Seventeen McKinney is part of Park Seventeen, a mixed-use development and the office portion is located at the corner of Akard Street and McKinney Avenue. Jerry Cobb, Jr. and Christine Mickey from CBRE in Dallas and Scott Willenbrock from CBRE in Birmingham represented the tenant. Robert Jimenez and Jim Kirchhoff from Granite Properties in Dallas represented the landlord, Granite Properties, in the transaction.

RETAIL Lubbock - Cole Real Estate Investments based in Phoenix, Arizona, has purchased South Plains Crossing, a 144,241 SF neighborhood shopping center in Lubbock for an undisclosed amount. The retail center sits on 12.3 acres at 6802 Slide Road near SWC Hwy. 289, across from the South Plains Mall. Chris Cozby, Senior Vice President; Chris Gerard, Vice President; and Kevin Holland, Vice President with CBRE represented the seller, ATR & Associates in Dallas. The buyer’s representative in the transaction was not disclosed.

Dallas - DDR Corp. has purchased Marketplace at Highland Village, a 195,652 SF power center. Marketplace at Highland Village is located on the northeast corner of F.M. 2499 (Village Parkway) and F.M. 407. The HFF team, led by senior managing directors Barry Brown and Jim Batjer, marketed the property on behalf of the seller, Founders Properties, L.L.C. DDR Corp. purchased the asset for an undisclosed amount free and clear of existing debt. The buyer’s representative in the transaction was not disclosed.

OFFICE MARKET: EXPANSION DECELERATES TO START 2013 • 1st quarter net absorption: 323,000 SF. • Overall vacancy rate: 16.4%, down from 16.5% at Q4 2012 and 17.2% a year ago.

• Rents: Essentially flat during 1st quarter; likely to rise during balance of 2013.

NORTH TEXAS

Dallas/Fort Worth Snapshot At First Quarter 2013

INDUSTRIAL MARKET: GROWTH PACE SLOWS • 1st quarter net absorption: 1.3 million SF. • Overall vacancy rate: 9.1%, down from 9.2% at Q4 2012 and 10.1% a year ago.

• Rents: Likely to increase modestly despite new development.

INVESTMENT SALES HEALTHY IN NEW YEAR We recorded $561 million of office investment sales in DFW during the 1st quarter of 2013. This compares to a revised $1.0 billion in all of 2012. Recently, AAA expressed interest in expanding its headquarters to the DFW Freeport/Coppell submarket through the acquisition of two Gateway Corporate Center buildings totaling 228,000 SF. This deal has not closed at the time of this writing. Sales prices averaged $150/SF in the Metroplex during Q1 2013, an increase from $122/SF in 2012. We expect prices to edge up in 2013, given the Metroplex’s relatively strong fundamentals.

29

Networking

Educat ion

Technology

Houston/Gulf Coast Chapter Luncheon

June 13, 2013

SOUTHEAST TEXAS

Topic: Houston Sports Authority Maggiano’s Little Italy 2019 Post Oak Blvd.

11:30 AM - $35 / $45

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Contact Ginger Coleman at 713.783.0297 or ginger@amchouston.com /www.ccimhouston.org

June 2013

Organizational Contacts Metro Houston | Galveston

Saturday 6/1 8:00 AM - 4:30 PM (Houston) RICH Meeting & Trade Show

Thursday 6/20 10:30 AM - 1:00 PM (Houston) BACREN Luncheon

Tuesday 6/4 11:30 AM - 1:00 PM (Houston) IREM June Luncheon

Thursday 6/20 5:00 PM - 7:00 PM (Houston) IREM Young Professionals Happy Hour

Wednesday 6/5 11:30 AM - 1:30 PM (Houston) CREW Luncheon

Friday 6/21 7:15 AM - 9:00 AM (Houston) CREN Breakfast

Thursday 6/6 11:00 AM - 1:30 PM (Houston) IFMA - Lunch

Friday 6/21 1:30 PM - 5:00 PM (Houston) IREM Annual Bowl-A-Thon

Thursday 6/6 5:30 PM - 7:30 PM (Houston) HOLBA Cocktail Party

Tuesday 6/25 5:30 PM - 7:30 PM (Houston) ACRP Happy Hour

Friday 6/7 11:00 AM - 1:00 PM (Houston) CREN Luncheon

Thursday 6/27 4:30 PM - 7:00 PM (Houston) CREN Happy Hour

Monday 6/10 11:00 AM - 1:00 PM (Houston) CREAM Luncheon

For more information on CALENDAR OF EVENTS log on to

Thursday 6/13 7:00 AM - 8:30 AM (Houston) HRBC Breakfast

Email your events to: Mark@REDNews.com

Thursday 6/13 11:30 AM - 1:00 PM (Houston) CCIM Luncheon

Event dates are based on each organization’s typical monthly schedule which is subject to change. Please verify each event with the related organization.

Thursday 6/13 11:30 AM - 1:30 PM (Houston) ULI Luncheon Tuesday 6/18 8:00 AM - 9:00 AM (Houston) FBSCR Meeting Tuesday 6/18 11:00 AM - 12:30 PM (Houston) BOMA Luncheon

ACRP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.acrp.org Appraisal Institute*. . . . . . . . . . .www.aihouston.com AAREA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.aarea.us BACREN. . . . . . . . . . . . . . . . . . . . . . . . . . . www.bacren.com BOMA. . . . . . . . . . . . . . . . . . . . . . www.houstonboma.org CCIM . . . . . . . . . . . . . . . . . . . . . . . . www.ccimhouston.org CoreNet. . . . . . . . . . . . . . . . . . . . www.corenetglobal.org CREAM. . . . . . . . . . . . . . . . . . . . . . . . . . . www.creamtx.com CRE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.cre.org CREN. . . . . . . . . . . . . . . . . . . . . . . . www.houstoncren.com CREW. . . . . . . . . . . . . . . . . . . . . . . . www.crewhouston.org FBSCR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.fortbend.org Greater Houston Partnership.. . www.houston.org HOLBA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.holba.org HRBC. . . . . . . . . . . . . . . . . . . . . . . . www.houstonrealty.org IREM. . . . . . . . . . . . . . . . . . . . . . . . . . . www.iremhouston.org NAIOP. . . . . . . . . . . . . . . . . . . . . . www.naiophouston.org O’Connor & Associates. . . . . www.poconnor.com HREC.. . . . . . . . . . www.houstonrealestatecouncil.org RICH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.richclub.org SIOR. . . . . . . . . . . . . . . . . . . . . . . . . . . www.siorhouston.com ULI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.uli-houston.org

You can get daily recaps of CRE News from 40+ different sources at www.REDNews.com

Premier Commercial Real Estate Networking IREM Houston Upcoming Luncheon Houston’s Changing Demographics Dr. Stephen L. Klineberg Tuesday, 6/4 - The Junior League

www.iremhouston.org

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/ June 2013

NETWORKING IREM Houston | IREM Networking Happy Hour | April 25

IREM Houston’s networking chair Kris Powell pictured with IREM Member Kay Nelson from Silvers and Services at their Hughes Hangar Happy Hour.

ACRP | Monthly Breakfast | April 25

(L to R) Warren Hitchcock ofNorthmarq, John Walsh of U of H Graduate Real Estate Program and Marty McAdams of McAdams Associates.

(L to R) Amy Regan of the Houston Food Bank and Warren Hitchcock of Northmarq.

SOUTHEAST TEXAS

IREM Houston held a networking event for 80 at Hughes Hangar in April. Featured in the photo are representatives from ABM who sponsored the event and dressed in costume to go with the 1920s theme.

(L to R) John Kajander of the Texas Medical Center, Speaker and Warren Hitchcock of Northmarq.

IREM Houston | Monthly Luncheon | May 8

(L to R) Randy Holford of JanPak, Kelly Hendrix and Greg Pell, CPM of Stream Realty networking before the IREM May Luncheon.

(L to R) Networking after the IREM May Luncheon is David Brown of JanPak, Margarita Harvey, ARM of Holt Lunsford and Mark Wright of Brookfield Properties.

Do you have an event you’d like to share?

Tell us about it at: mark@REDNews.com

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SOUTHEAST TEXAS

ANNOUNCEMENTS & DEALS DONE

Tom Condon, Jr.

ANNOUNCEMENT - Houston - Colliers International Houston is pleased to announce the addition of Tom Condon, Jr. as senior vice president in our The Woodlands office. “We are thrilled to have Tom join our firm,” said Patrick Duffy, Colliers International’s president in Houston. “He is very highly regarded in our industry and a great fit for our culture. He will add significant depth to our North Houston/ Montgomery County team.” represented the tenant.

ANNOUNCEMENT - Houston - Colliers International has opened a third Houston area office in The Woodlands. The office is located at 24 Waterway, Suite 630, The Woodlands, TX 77380.

ANNOUNCEMENT - Houston - Colliers International is pleased to announce the addition of Don Schmidt as Managing Director of Corporate Solutions, based in Houston.

Schmidt will act as a leader of business development and client relationship management within the greater Texas region for the Corporate Solutions Americas organization, focusing on industrial as well as oil and gas vertical markets.

MULTIFAMILY Houston - A Texas partnership has purchased the Dover Pointe Apartments, a 168 unit apartment property located at 14445 Wallisville Road. Jeffrey Fript, an investment specialist in Marcus & Millichap’s Houston office, had the exclusive listing to market the property on behalf of the seller, a Texas partnership. The buyer was also secured and represented

by Fript.

OFFICE

Don Schmidt

INDUSTRIAL Houston – Maylar, LP has purchased a 33,793 SF building located at 1605-1607 N. Main Street in Pearland, TX 77584. Mike Chance of Coldwell Banker Commercial United, Realtors represented the seller, Ocwen Loan Servicing and George W. Jones of CBRE, Inc. represented the buyer in the transaction.

Houston - Massoud Real Estate Investments, LLC has purchased a 407,855 SF facility on 20 acres of land located at 8110 Kempwood (corner of Bingle) for their company Euro-Mid,Inc., a specialty food importer and distributor. Stephen Kuper and Steve Adkisson of The National Realty Group represented the buyer. The seller and their representatives were not disclosed.

Houston - House of Forgings, LLC has leased 48,910 SF of industrial space located at 16684 Air Center Blvd in Houston. John Hornbuckle of Cypressbrook Company represented the landlord in the transaction. The tenant was represented by Jeff Venghaus of Jones Lang LaSalle.

Houston - 525 McCarty, LLC has purchased a 109,620 SF facility on 4.3 acres located at 525 McCarty Street in Houston. Clay Pritchett, NAI and Clay Peeples of Boyd Commercial represented the buyer in the transaction. Reed Vestal and Ross Thomas of Finial Group represented the seller, Elbi of America, Inc. Houston - NAI Houston notes NCP 2007 sold a 201,574 SF NNN leased building at 4949 Windfern in Houston, Texas. Josh Lass-Sughrue, John Ferruzzo and Clay Pritchett handled the transaction. The single-tenant investment sale is one of the largest on record in Houston for 2013.

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Houston - Forum Energy Technologies, Inc. has leased approximately 81,645 SF on 4.8 +/acres of land at 8101 Fite Road in Pearland, TX. Joe Evans and Janae Evans, SIOR of Evtex Companies represented the landlord, G&B Real Estate, Ltd., in the transaction. James M. Stark, Jeff Cairns, and Steve Hesse of CBRE, Inc.

/ June 2013

Houston - Sequent Energy L.P. has leased 46,356 SF of office space in Two Allen Center - 1200 Smith Street, Houston. The landlord was represented by John Morton and Paul Frazier of Brookfield Properties, and the tenant was represented by Griff Bandy of NAI Houston and Ian Henderson of Jones Lange LaSalle in Atlanta Georgia.

Houston - The Griffin Capital Corporation, on behalf of Griffin Capital Essential Asset REIT, Inc., purchased 1200 Enclave Parkway in Houston, TX for $48.75 million, or $326 PSF. The 149,683 SF property was constructed in1999 and is situated on 5.36 acres. The owner, Piedmont Office Realty Trust, was represented by Jeff Hollinden & Robert Williamson of HFF, as well as Piedmont’s Karen Purdy, Director-Capital Markets. The buyer was self-represented.

Houston - Technip USA has leased 428,831 SF of office space in the Energy Tower III office building, located at 11740 Katy Freeway. The speculative office building, now 100% leased, is located on the Energy Plaza Investments LTD development site. Mac Haik Realty is providing development, leasing, project management and property management services for the project, which is owned by Mac Haik. Steve Bryant, Brandon Poynter and David Carl represented Energy Tower, LTD in the transaction.

6 MONTHS FREE ON 5 YEAR NEW DEALS STARTING @ $12.00 GROSS - LIMITED TIME AVAILABLE SUITES

FOR SALE OR LEASE

Suite 100 106 107 109 115 200 212 230 231

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SOUTHEAST TEXAS

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Terri Torregrossa Ttorregrossa@moodyrambinint.com 713.773.5500

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SOUTHEAST TEXAS 34 /

OFFICE MARKET: TEMPORARY PAUSE IN ABSORPTION • Net absorption: 8,000 SF in Q1 2013; 4.2 million SF in 2012.

• Overall vacancy: 10.8%, up fr om 10.7% at year-end 2012. Second-lowest in the nation among major metro areas.

• Office asking rents: Up 0.4% fr om year-end 2012 after rising 4.8% in 2012.

• Outlook: Continued growth likely in 2013.

THE HOUSTON METRO AREA OFFICE MARKET OUTLOOK The Houston metro office market will likely experience strong growth in the period ahead, provided that the regional economy is not disrupted by global forces. As businesses increase leasing activity, vacancy will continue declining, likely dropping into the high-9% range over the next two years. As a result, rents will likely gain upward momentum in 2013, especially for Class A space. Office market conditions are currently in owners’ favor, and that trend is likely to continue as vacancy declines. However, with the pipeline of new space (including planned space expected to start soon) now at 3.1% of the standing inventory, rent increases may be more modest than experienced in 2011-12. The Katy Freeway/Energy Corridor in particular is a candidate for strong performance during the balance of 2013. However, competition for tenants is limiting rent growth, and more supply is due to come on the market soon, with 2.4 million SF under construction. Therefore, investors should carefully balance strong demand forecasts against evolving market fundamentals.

/ June 2013

SOUTHEAST TEXAS

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/ June 2013

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Excerpts from Economy at a Glance – Houston (The May publication of the Greater Houston Partnership) • •

•

•

•

• •

In March, Houston’s unemployment rate was 6.1 percent, down from 8.8 percent at its peak in June ‘11 Population growth in the suburbs has created employment opportunities in the outlying counties. From ’02 to ’11, the Houston region added 13,857 new business establishments

The regional population growth has trended toward the suburban counties.

Last year, approximately half of all new single-family homes were built outside of Harris County Among the nation’s 20 largest metropolitan areas, the Houston-Sugar LandBaytown Metropolitan Statistical Area had the fastest rate of job growth in the 12 months ending March ‘13 The Houston metro area created 102,300 jobs during those 12 months, slightly less than the nation’s two most populous metro areas – Los Angeles created 116,000 jobs and New York created 106,800 jobs Oil prices have not fallen below $70 per barrel since May ’10 Houston has a net migration gain of approximately 150 people per day which is spurring the demand for housing, retail and consumer-related services Compliments of Moody Rambin Interests – Houston’s Leading Commercial Real Estate Firm

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/ June 2013

..........................................................................................................................................................

Economy at a Glance – Houston

THE ECONOMIC IMPACT OF THE PORT OF HOUSTON

1,026,820 jobs in the state of Texas were

related to marine cargo activity at PHA and private terminals

$178.5

billion of total economic activity in the state of Texas

$4.5

billion of state and local taxes

Excerpts from the 2012 Economic Impact Summary released by Port of Houston Authority.

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“Risk Only Money” – Success in Business Without Risking Family, Friends, and Reputation” – by Jack DeBoer Jack DeBoer is a legend in the hotel industry. A fast and furious career initially propelled him to being one of the top apartment builders nationwide.

At the peak, his fleet of company planes included a Boeing 727, Cessnas 208, 310, & 172, a Learjet 35, and a North American SNJ 1942.

Then Jack’s company got caught in an economic cycle and crashed. The book chronicles how he worked out of his financial hole, and went on to found four hotel brands, which were based on his experience as a multifamily developer.

The brands are Residence Inn, Summerfield Suites, Candlewood Suites, and Value Place.

Jack pioneered free breakfast, when his accountants realized that most hotels lost money selling food. Jack decided it was cheaper to give it away than to sell it, and other chains followed suit.

DeBoer invented the “extended stay” brand, which was a lodging concept midway between an apartment rented by the month and a hotel room rented by the night.

By cutting back on desk clerk hours and daily room cleaning, DeBoer created a very cost-effective way for travelers to spend the night, especially for several days or weeks at a time.

Included in the narrative on his hotel brands is the fascinating story of how he sold one chain, then bought it back, and re-sold it to a larger chain.

He went public, and he discusses the pitfalls and costs of doing so - financial costs and the cost of losing entrepreneurial independence.

Eventually he partnered up with Holiday Inn in the ownership of Residence Inn, with a buy-sell agreement.

In a quick meeting with the Holiday Inn Chairman, DeBoer placed a figure of $50 million on the table, thinking the worldwide chain would buy his half for that sum.

Instead, Mike Rose said: “We are a seller at that price.”

DeBoer had two weeks to come up with $50 million. He went to Marriott who loaned him this sum to buy out Holiday Inn’s half. Of course if Jack couldn’t pay back Marriott, Marriott would own all the chain at half the value.

You will see the outcome of this “business dance” when you read the book. Suffice it to say that Holiday Inn was not happy when Residence Inn by Marriott became the chain with numbers that outperformed all the rest.

Jack DeBoer

I particularly like this excerpt from the book on The Value of Humility: “People know it when you have success, position, money, toys, good health, and friends in high places. Nothing is more boring than a person who constantly reminds others of what they have or have achieved, how healthy they are, who they know, how far they ran this morning, how big their boat is, or what kind of airplane they have.

Humility is so much more appealing than chest thumping. Just remember, with a few important exceptions like personal relationships, almost everything you have is fleeting. You could easily lose it. Then what? You may need some help, that’s what.

And arrogance ist’t going to help. Arrogance doesn’t build anything…

A humble man can draw on his personal resources when he needs help. We all fail. We all need help at some time or another, and when we do, we realize that we aren’t going through this life alone. Building a bank of good deeds for others will serve you well in times of need. Arrogance draws down your balance more quickly than almost anything else. Does this sound like a selfish approach to humility and good deeds? No, it’s just practical.”

Risk Only Money is available in paperback from amazon.com

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/ June 2013

Hankamer & Associates - Recent Hotel, Hotel Site & Land Deals Done Odessa, TX - Hilton Garden Inn 100 Rooms - Opened September 2010

Hilton Garden Inn - Odessa, TX

Del Lago Resort - Lake Conroe/Montogomery, TX Hampton Inn - Beaumont, TX Comfort Inn & Suites - 63 units Galveston, TX Holiday Inn Express & Suites - Houston Intercontinental Airport, Houston, TX

Conroe, TX - Baymont Inn & Suites Holiday Inn - South Padre Island, TX

Oklahoma - 5500 Acre Ranch

Port Lavaca, TX - Days Inn

Houston, TX - 4 acres - 9300 Main Street

San Antonio, TX Hampton Inn

60 acres - Raw Land - Texas Hwy 3 (Old Galveston Rd)

Laredo, TX - Hampton Inn

5 acres - RV Park South Main near Loop 610

Brenham, TX - Holiday Inn Hampton Inn - Austin, TX

Motel - 32 units Galveston Bay View - San Leon, TX

Sold, January 2012 Site and structure to Vista H ost, Inc., Houston, TX, for construction of a high-rise Hampton Inn and Suites between the University of Texas and the State Capital, Austin, TX

5 Acre Site 249 @ Timber Tech, NW Houston, TX

Hampton Inn - Sulphur, LA

Holiday Inn - Houston East Houston, TX

Houston, TX - 2.09 acre Tract in Brittmore-Tanner Business Park for $478,000

1.6 Acre Site Hwy 105 @ Walden Road, Lake Conroe, TX

Del Lago Resort - Montogmery, TX

6 acre tract at Highway 6 / Hempstead Highway

Hampton Inn & Suites Reliant Center / Medical Center, Houston, TX

Art Gallery - Montrose Area 5 acre site; 249 @ Timber Tech

Round Rock, TX - Baymont Inn & Suites Galveston Island, TX - Holiday Inn Express & Suites College Station, TX - Super 8 Motel 60 room Austin, TX - Holiday Inn Express I-35 Corpus Christi, TX - Ramada Inn

1.8 Acre Site Loop 610 West, Galleria-Post Oak Area Houston, TX 350 Acres - Subdivision Site Dickinson / Texas City, TX

100 acres - Investment Land Hwy 288 / Airport Boulevard

Victoria, TX - Hampton Inn

Holiday Inn Express - Houston, TX

Monahans, TX - Sold 5.8 acre Tract I-20 for Motel 6/Studio 6 “new prototype� hotel

Junction, TX - Days Inn

Brownsville, TX - Ft. Brown Hotel & Resort

Comfort Inn & Suites - Galveston, TX

Holiday Inn - Houston East

Schlitterbahn Water Park South Padre Island, TX Hankamer & Associates acted as adviser in securing $28 million in financing to facilitate acquisition of Holiday Inn on the Beach and to convert its indoor conference center to an indoor waterpark. Included are plans to connect both indoor and existing outdoor waterpark with a canal for use by floating guests.

Austin/Round Rock, TX - Baymont Inn & Suites

Houston, TX - Holiday Inn Northwest

Sulphur, LA

Guestlodge Hotel & Suites Tuscaloosa, AL Beaumont, TX

For more information on this or any other of our current listings, please visit our website at www.hankamer.com

Ray Hankamer Broker T: 713.789.7060 X1205 RHankamer@hankamer.com 5851 San Felipe Suite 350 Houston, Texas 77057

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advertiser index

A. A. Realty Company..........................................36 ACRP..................................................................30 Allegiance Bank...................................................44 Bejjani & Associates.............................................31 Bernstein Perwien Properties..................................35 Biltmore Construction & Development....................1, 5 Caldwell Companies.............................................13 CCIM Central Texas..............................................20 CCIM Dallas........................................................26 CCIM Houston.....................................................30 CREAM................................................................31 CREN.................................................................30 CREW Dallas.......................................................29 CREW San Antonio..............................................20 CTCAR................................................................20 First Warranty Realty.......................................35, 37 Freedom Realty Exchange......................................23 Greenberg & Co..................................................39 Hankamer Commercial Brokers, LLC........................41 42 /

/ June 2013

Holcomb Properties Company................................37 International Church Realty....................................37 IREM Dallas.........................................................29 IREM Houston......................................................30 IREM San Antonio................................................20 Kensington Property Group...................................15 Mabry’s Charter Oak Realty..................................42 Maple Development..............................................42 Moody Rambin Interests........................................33 NAI Houston.......................................................36 Phase Engineering, Inc.........................................28 Roshan Towers, LLC............................................2, 3 Shaw Interests......................................................33 TAO Interests, Inc.................................................42 Tarantino Properties, Inc......................................8, 9 Texas Funding Corporation....................................42 Transwestern..........................................................7 Zarsky Industries...................................................37

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